Exclusive reporting and analysis for corporate-finance executives.

The Morning Ledger: Eyeing the Economy

The Morning Ledger cues up the most important news in corporate finance every weekday morning. Send us tips, suggestions and complaints: darren.mcdermott@wsj.com.

THE DAY AHEAD:

Good morning. A big number this morning with the Q1 GDP report, as concern grows that the world’s biggest economy is heading for a spring slump. Consensus estimates put growth in the year’s first three months at 2.5%, down from 3% in the fourth quarter.

Growth likely cooled from the previous quarter as replenishing of inventories by businesses slowed, though stronger demand for automobiles and a lift to homebuilding from warm weather blunted the blow, says Reuters. “Details of the report are expected to offer a picture of underlying strength, with even home construction poised to rise at its fastest pace since the second quarter of 2010 thanks to the unusually warm winter.”

The more forward-looking Thomson Reuters/University of Michigan Survey of Consumers is seen slipping to 75.7 this month from 76.2 in March.

S&P dividend on pace for record. Aggregate dividend payouts among Standard & Poor’s 500 index members are on pace to hit a record this year, Maxwell Murphy reports. The anticipated payout among all of the companies is $279 billion, according to S&P senior index analyst Howard Silverblatt, a number he says may be revised higher. But this trend could soon reverse if dividend taxes soar next year, a possibility under current legislative proposals. In that case, companies may seek to return value to shareholders through buybacks instead.

Pernod Ricard tweaks its debt again. French spirits maker Pernod Ricard extended its debt maturities by entering into a new, multi-currency, revolving credit facility, Murphy reports. The facility is for about $3.3 billion and matures in five years, and replaces three separate revolvers that were set to mature next year. CFO Gilles Bogaert told CFO Journal in the fall that dealing with debt was the company’s top priority.

GM CFO’s pay hit by government ownership. The pay of GM CFO Daniel Amman, who was promoted from treasurer a year ago, is being significantly constrained by the U.S. Treasury’s 30% stake in the auto maker. Amman’s compensation last year was valued at $3.5 million, which GM said in a filing, “was limited by the [TARP appointed] Special Master, and it remains below median, including his total cash compensation, which is below a competitive level.” Comparatively, Lewis Booth, Ford’s recently retired CFO, received compensation valued at $7.7 million last year.

CORPORATE NEWS:

Wal-Mart not alone running afoul of FCPA. Wal-Mart may be getting all the attention for allegedly bribing Mexican officials but it’s certainly not alone, Fortune’s Stephen Gandel writes. Two more examples came this week as the SEC charged former Morgan Stanley executive Garth Peterson with bribing an official of a state-owned Chinese company in order to win business for the investment firm, and media conglomerate News Corp. confirmed that it too was the subject of a U.S. bribery investigation. At least 81 public companies are under investigation by the SEC or the Justice Department for running afoul of the FCPA, according to the FCPA Blog.

CFOs getting riskier with cash — slightly. Corporate treasurers frustrated by sometimes negative returns holding ultra-safe government debt are beginning to take on more risk with their cash holdings, for example by moving into longer-dated bonds, according to CFO.com. CFOs and treasurers “are in the most difficult place they have been in their careers,” says Paul Montaquila, vice president of fixed income at Bank of the West. “With Treasury bills trading at 20 basis points, a 50 basis point to 60 basis point return [on a term CD] is absolutely worth it.”

Cooling China casting pall over U.S., Europe firms. Some big U.S. and European companies are at risk of losing one of their surest of growth bets as the Chinese economy slows to a three-year low, according to Reuters. Caterpillar, 3M, United Technologies and ABB are among manufacturers reporting weak performances in China in the first quarter. That’s making investors nervous even as Western CEOs predict rapid growth from the government’s easing monetary policy and expansion into faster-growing cities inland.

U.S. companies keep slashing IT. Corporate executives are continuing to cut budgets and delay information technology investments despite coffers full of cash, the Journal reports. The pullback is being seen in sluggish dollar-denominated sales for India’s biggest IT companies. “They are asking us to do more and more and more with less,” says Ricardo Bartra, chief information officer for the Americas for courier company DHL, a unit of Deutsche Post.

Why the jobs data aren’t improving. More signs of a spring slump in economic growth emerged yesterday in the jobless claims data, but an analysis by the Journal’s Scott Thurm shows the problem isn’t that companies aren’t hiring, they’re just not hiring enough in the U.S. While 35 big U.S.-based multinational companies added jobs much faster than other employers in the past two years, nearly three-fourths of the slots were overseas, he writes. Companies including Wal-Mart, International Paper and Honeywell boosted their overseas staff by more than 333,000 from 2009 to 2011, triple the amount hired in the U.S.

REGULATORY NEWS:

Goldman pulled deeper into Galleon probe. Investigations are deepening into the potential involvement of Goldman Sachs employees in the Galleon insider-trading ring, the WSJ’s Michael Rothfeld and Reed Albergotti write. Prosecutors and securities regulators are looking into whether a senior Goldman investment banker gave Galleon hedge-fund traders advance word of pending healthcare deals, they write, citing people familiar with the matter.

FTC hires top-gun to take on Google. The Federal Trade Commission said it enlisted a seasoned lawyer to help lead its antitrust investigation into whether Google abused its dominance in Web-search advertising, the Journal reports. While the commission hasn’t decided whether to file a lawsuit against the Internet giant, the hiring of Beth Wilkinson — a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP and former Justice Department prosecutor — signals that the commission is prepared to take its case to court, if necessary.

INTERNATIONAL NEWS:

Europe’s slow death by a thousand cuts. Standard & Poor’s slashed Spain’s credit rating for the second time this year — two steps to BBB+ — on concern the government will have to provide more support to banks as the economy contracts, while Greece gears up for a May 6 vote that may decide the future of the euro, according to Bloomberg. The first country to take an international bailout is entering the final stretch of its first election campaign since becoming a “global financial pariah,” with polls showing no party gaining a mandate to enforce the austerity policies needed to stay in the euro, Maria Petrakis writes. Adding to the uncertainty surrounding Europe’s future, France’s François Holland, who has promised to renegotiate the stability treaty, is poised to win the May run-off vote to become the next president.

Murdoch expresses ‘regret,’ spreads blame.News Corp. Chairman Rupert Murdoch called phone hacking at the News of the World “totally wrong, and I regret it,” while accusing a senior lawyer at the shuttered paper of being behind a “culture of cover-up,” the FT reports. “The News of the World, I’ll be quite honest, was an aberration and it’s my fault,” he said at the Leveson inquiry. “The senior executives were all . . . misinformed and shielded from anything that was going on there.”

China’s yuan sets new record. The Chinese central bank guided the yuan to a fresh record high for the second straight day after renewed pressure from Washington, the Journal’s Shen Hong and Wynne Wang report. The People’s Bank of China set the dollar/yuan central parity rate at 6.2787, the lowest level since China depegged its currency from the dollar in 2005. The move came despite consensus among investors that the days of fast yuan appreciation are over.

WEEKEND READER:

Every Friday we select a handful of in-depth articles we think are worth a bit of your valuable weekend time, either because they peel back the layers on a compelling business story, or somehow make us look at business in a different light.

Inside Silicon Valley’s farm system. Railroad robber baron Leland Stanford had a dream of turning farmland south of San Francisco into a new sort of university that would qualify students for “direct usefulness in life.” Traipsing around Stanford’s “startlingly paradisial” campus, the New Yorker’s Ken Auletta finds the dream realized. Ties to the nearby tech industry have made Stanford the “intellectual nexus of the information economy.” Silicon Valley alpha dogs are a constant presence on campus–teaching, recruiting, offering millions to various buildings, drinking lattes, etc. The school has generated $1.3 billion in royalties from campus-inspired tech inventions alone. Meanwhile every student in flip-flops aspires to build the next Instagram. But some wonder whether Stanford—and its president–are a bit too cozy with Silicon Valley to the detriment of a more well-rounded education.

The two faces of Ben Bernanke. First there was Professor Bernanke, a man not yet chairman of the Federal Reserve, who carefully studied the Great Depression as well as modern Japan, and said the policy responses in both cases had been far too timid. But then, writes Paul Krugman for the New York Times Sunday Magazine, there was Chairman Bernanke, a man who followed his own advice when it came to rescuing the financial system, but then avoided taking the steps available to him to address a lingering malaise of the Great Recession: unemployment. Among the policies that pre-Fed Bernanke suggested, but has yet to try, is to raise the inflation target above its current 2%, so as to discourage companies from sitting on all of their cash. “The Fed under Bernanke is by no means the worst sinner in this failure of intellect and will, and you can argue that Ben Bernanke has done a better job than anyone else who might have held his position,” Krugman writes. “Yet the fact is, he has not done remotely enough.”

Leaders, change thyself. Change comes easier to those companies that make leadership development part of any company-wide improvement effort, says McKinsey Quarterly. “Far too often, leaders ask everyone else to change, but in reality this usually isn’t possible until they first change themselves,” the authors write. These development efforts should include a focus on what the authors call “softer” skills, from keeping employees inspired by getting out of the office and visiting the trenches, to building a network of leaders who “got your back,” so to speak. The authors argue that companies can see real returns on investment from these basic changes in leadership style.

CFO MOVES:

U.K.-based drug maker AstraZeneca named Chief Financial Officer Simon Lowth as interim chief executive. He succeeds David Brennan, who resigned amid questions about the company’s drug pipeline. Chairman Louis Schweitzer said in a press release, “I know we can count on Simon’s leadership, supported by a strong and experienced Senior Executive Team, to maintain focus and momentum as the Board seeks a smooth transition to a new chief executive over the coming months.”

Allscripts, based in Chicago, said that Chief Financial Officer William J. Davis will resign May 18. He will be succeeded in an interim capacity by W. David Morgan, currently senior vice president of finance, according to an 8-K. Davis received compensation in fiscal 2010 valued at $1.7 million, according to a proxy filing.

Ingram Micro, a technology logistics company based in Santa Ana, Calif., promoted Chief Financial Officer William D. Humes to chief operating officer. His base salary is being increased to $650,000, and his target bonus will be 90% of his base, according to an 8-K. Humes will retain the CFO title. He received compensation in 2011 valued at $2 million, according to a proxy filing.

Deloitte's Financial Reporting Alert discusses certain key accounting and financial reporting considerations related to the current economic conditions in the eurozone and Puerto Rico, including a summary of financial reporting implications that would result from a country's decision to exit the eurozone and an outline of disclosures recommended by the SEC in 2012 about European sovereign debt.